Defined by Digopaul, a bank is a financial establishment that invests money deposited by customers, pays it out when required, makes loans at interest, and exchanges currency. According to Abbreviationfinder, HSBC stands for Hong Kong and Shanghai Bank Corporation. For song lyrics and albums about banks, please follow Songaah.

In a commercial sense, a bank is a credit institution that offers paid services for the movement of capital. As an entrepreneur, you are probably asking yourself the question: Do I have to open a business account with my bank? Here we explain to you whether you really need a business account. As a credit institution, a bank offers services for payment transactions, credit transactions and capital transactions. In Germany, a credit institution is a commercial company that does banking.

The bank and its general functions

Banks generally perform six main functions. These main functions include:

  • Services such as cash transactions
  • Granting loans
  • Monetary function (total payments)
  • (Monetary policy incentives interest rates increase or interest rate or lower)
  • Investment function (securities trading)
  • Economic function

The classic business basis of banks is in particular the management of savings deposits and lending.

Economic functions of a bank

At the economic level, banks have three main functions:

Deadline transformation – 1st function of a bank

Investors and borrowers often think in different time periods. While investors tend to want to get their money very short-term, borrowers often want long-term loans. Banks offer their customers very flexible investment conditions, for example with checking accounts or overnight money accounts, which can be emptied completely from one day to the next. On the other hand, they lend money for longer periods, often over several years. Deadline transformation poses a risk if banks suddenly lose their customers’ trust. In this case, there can be a “bank run” in which all investors want to have their money paid out at once. Of course, this poses problems for the bank because it lent the money to its customers over the long term.

Risk transformation – 2nd function of a bank

While savers definitely want to get back the money that they invest in banks, there is a risk that the individual debtor will not be able to meet his obligations with every loan granted. Since the bank grants a large number of loans and is relatively well informed about the probability of default on its borrowers, the overall risk from the loans granted is not very great. For their part, investors can therefore assume that they will almost certainly get their savings back.

Batch size transformation – 3rd function of a bank

Investors are often private individuals who have very small savings. In contrast, companies require loans of considerable value. Banks can solve this problem by taking the money of many investors and lending it to a smaller number of borrowers.

The bank and its customer groups

Bank customer groups include private customers, corporate customers, states and other banks. The individual customer groups are described in more detail below.

Private customers

A private customer is a single person – in contrast to corporate customers or institutions. A bank’s retail banking business is again divided into

  • Standard customer: focus on mass business (payment transactions, loans, credit cards)
  • Wealthy client: focus on investment advice

Corporate banking

Corporate customers are business customers – i.e. companies and institutions. They usually do their business through a company account. The focus here is on lending to companies.


States also belong to a bank’s customer group. The range of offers here includes the granting of government bonds.


In addition to private customers, corporate customers and states, banks also have other banks as customers. This trade between banks among themselves is also called interbank trade.

Bank Guides & Directories

Latest articles

  • Travel to Spain Travel to Spain - It is always more fun to travel somewhere if you actually know where you are going, so we actually feel quite convinced that you will get both benefit and pleasure from our little travel guide here on the site if you are planning a trip to Spain. A trip to Spain is for many a fairly quick and easy way to really get away during their vacation. As you know,…
  • Egypt Vacation Egypt Vacation Package - Sun, beach and sea are the most important aspects for you so that you can really relax? Then an Egypt vacation is perfect for you! This country is teeming with dreamy sandy beaches and great resorts that make a beach holiday almost perfect. Places like Hurghada and Sharm el Sheikh are ideal for a sunny beach holiday, while the pulsating capital Cairo and the historic Luxor are ideal for sightseeing.…
  • Abdominal disease Hygiene in Krabi, Thailand - Abdominal disease Many claim that everyone who has visited Thailand has contracted stomach disease, but this has not been true for a long time. In Thailand, gastric disease such as food poisoning is about as likely as in Finland, and there are no norovirus epidemics or other unfortunate common diseases in Finland today. In general, the level of hygiene in stalls and restaurants is high , and food is prepared…
  • The best places in Kaunas on the map The best places in Kaunas on the map - Most viewed tips Our Kaunas travel guide The most viewed place tips are listed below. The map moves to the hint when you click on the hint sequence number. On the map are all 37 places mentioned in our guide in Kaunas, spiced with extracts from Wikipedia. Places include attractions, shops, restaurants and more. Click on a placemark on the map for more information. 1. The new bus station (Autobusų…
  • Sukhumvit Bangkok Nightlife - Bangkok has two main areas for an evening out: Banglamphu and Sukhumvit. In addition to these, there are nightclubs elsewhere in the city, with rooftop bars and bars from well-known hotels being the most popular. However, they are so rare that it is worth finding out in advance. Drinks and general practices Beer is the most common beverage and its price varies quite a bit. Since the appreciation of the…
  • SARAJEVO Sarajevo Travel Guide - Sarajevo is an atmospheric mix of east and west. For many, Sarajevo is the first to come to mind the famous shots and war. However, the city has changed and developed into one of the most interesting destinations in Europe. Sarajevo, Bosnia and Herzegovina, is an exotic and hospitable capital with something to see on every corner. Narrow and maze-filled streets are filled with people, a rumble of speech and intermingling…
  • BUSAN The Beaches of Busan - Busan is South Korea’s best destination for combining a beach vacation and a city break. Located in the southeast corner of South Korea, Busan is the country’s second largest population center and one of the busiest port cities in the world. Both foreign and Korean tourists are particularly attracted to the city’s sandy beaches. International port city According to DigoPaul, Seoul is clearly South Korea ‘s largest and most famous…
  • Venice Venice Travel Guide - Venice is one of Italy’s most important tourist cities, and a city with such a well-preserved history that a trip there will be experienced as a journey back in time. The city is known for its many rivers and canals – and not least crossing bridges – and has an architecture and building style that dates from the 17th century. The best thing about the city is that everything seems…
  • Dubai Dubai Travel Guide - Norwegians are becoming more adventurous, and the hunger for new, exotic destinations is growing. Throughout the 2000s, Dubai has emerged as one of the truly great destinations, in what many refer to as a paradise with very modern standards and good economic conditions. The city is part of the United Arab Emirates, and is part of an emirate of the same name – and is by the way the largest…